- The 2014 National Budget is formulated on the theme of “Strengthening Economic Resilience, Accelerating Transformation and Fulfilling Promises”. The budget strives to strike a balance between ensuring a sustainable domestic economy, achieving the national transformation agenda, and reducing the burden of the people.

- The total budget allocation for 2014 has increased to RM264.2bil (2013: RM261.3bil). The allocation for development spending is RM46.5bil (including RM2bil for contingencies). Meanwhile, the operational expenditure amounts to RM217.7bil.

- The overall allocation for subsidies is RM39.4bil for 2014 (or -15.6% YoY). Similarly, we envisage further rationalisation of subsidies in 2014 as subsidy bills decline.

- The GST rate is fixed at 6% and will be effective from 1 April 2015 onwards. Based on our estimate, GST rate of 6.0% would generate about RM17.8bil in government revenue during the first two years of implementation.

- Aside from that, the government will allocate RM4.6bil of disbursements through 1Malaysia People's Aid (BR1M) in 2014. The government has increased the handouts of BR1M to RM650 to households with monthly income below RM3,000. For individuals earning less than RM2,000, the handouts are increased to RM300 from RM250.

- BR1M is also extended to households with a monthly income between RM3,000 and RM4,000. Additionally, the government has also introduced the contribution of RM50 to the Group Takaful Rakyat 1Malaysia (i-BR1M) which provides protection of up to RM30,000 to BR1M recipients in the event of death or permanent disability.

- The government is expected to strengthen its fiscal stance in 2014. For 2014, the government projects a fiscal deficit of 3.5% as revenue improves and GDP advances during the course of 2014. Revenue is expected to amount to RM224.1bil (or +1.7% YoY). Petrol tax revenue will account for 12.6% or RM28.3bil of total revenue in 2014. 

Source: AmeSecurities